The real estate industry is not new, but with all of the home renovation and design TV shows this day, it’s become a career many people are now interested in pursuing. If your only knowledge of what real estate is like comes from TV shows, then you may have unrealistic expectations of what will happen. Here are four things you need to know before making the jump into real estate.
It’s not a get rich quick scheme
Many people see how successful some are in the real estate business and assume that anyone can be successful. They think if they purchase a rental property, they’ll be a millionaire in no time. But, that’s not how the industry works. Becoming successful at real estate takes a lot of time, money and hard work. The people at the top didn’t get there overnight. You have to be determined and hard-working to succeed in real estate. If you’re not up for the challenge, you won’t get very far.
The market won’t go up forever
The housing market is a volatile one. It’s cyclical and seasonal. When the market is up, it feels as though it’ll last forever and the success will never end. Unfortunately, that’s never how it works. What goes up must come down. Be prepared to experience slow quarters, typically Q1 and Q3. Don’t let the bad times discourage you. Keep your head up and remember the market will bounce back.
Landlording is only a part-time job
You may be discouraged from starting in real estate due to the misconception that being a landlord will take up all of your time. While that was the case in the past, it no longer is. Many of the associated tasks, like handling maintenance, collecting rent, finding and screening tenants, can now be handled through online software. Being a part-time landlord allows you to maintain a full-time job and really maximize your profits.
Flipping houses is not the best way to build wealth
While flipping houses is big on TV, it’s not the best way for you to make money. House flipping is riskier and typically has less return than keeping your assets does. When you rent out a property, the tenant is responsible for paying your mortgage for you. Once the house is paid off, you’re making pure profit and can buy your second real estate property.